BAGUIO CITY – Ifugao and Isabela have agreed to split a P114-million transfer tax paid by the new operators of the 360-megawatt Magat hydroelectric power plant, easing the tension between the two provinces over the power facilities’ profits.

Ifugao Gov. Teodoro Baguilat Jr. said he and Isabela Gov. Maria Gracia Cielo Padaca agreed to a 50-50 percent split during a six-hour meeting at an Isabela resort on Monday.

It was the first meeting set to resolve their legal and boundary problems, which resurfaced when Magat was sold to the SN Aboitiz Power Inc. (Snap) in 2007, Baguilat said.
The Bureau of Internal Revenue said taxes were paid to Isabela in the last few years of the Magat plant operations because the facility was located in what had previously been acknowledged as Isabela territory.

Magat’s main plant is located in Ramon town.
But Baguilat said some of the areas attributed to Isabela are Ifugao lands.

A regional trial court in Isabela brokered the first settlement talks, he said.

Snap, a joint venture between Aboitiz Power Corp. and SN Power Invest AS of Norway, had asked the court to restrain both provinces from collecting taxes from them until they resolved their differences.

“The company did not want to pay taxes twice – one to Ifugao and one to Isabela – so the court called us together,” Baguilat said.

The settlement only involved Snap’s P114-million transfer tax, which was turned over to the custody of the Isabela court.

The transfer tax is a transaction fee for properties that are passed on from one owner to another.
Baguilat said another settlement is being worked out regarding Magat’s outstanding real estate taxes and additional business charges.

Isabela Vice Gov. Ramon Reyes said his province expects to receive a bigger share from these other taxes because the province maintains that it represents most of Magat dam’s host communities.
Padaca told reporters that the transfer tax settlement was “the best that we can have.”

The crisis over Magat has already cost Ifugao because it is trying to claim a share from the national wealth tax to pay for the power consumption of Ifugao towns.